Organisations across Australia are working to keep up with the complex policy changes occurring throughout HR and payroll, including small businesses. Technological disruption and heightened employee expectations are shifting the work landscape day by day. The Fair Work Commission’s decision to change annualised salary clauses have added more complexity to payroll. Making matters worse is the global Coronavirus pandemic that has put businesses in an unprecedented state of uncertainty.

Tracing out the bigger picture helps to define business priorities and enable organisations to better ease into new framework systems.

Annualised salaries to tighten pay policies

Under the Fair Work Commission’s decision, new annualised salary clauses have taken effect this month, placing strict regulations on pay transparency. The first step for HR and payroll managers is to foster clear communication. This means identifying the possible work hours and pay amount with the employee, then turning these into written agreements that must be adhered, with annual reconciliations to ensure the employee remains better off than the relevant award.

The clauses also introduce “outer limit” hours, which refers to any overtime or penalty incurring hours an employee works beyond a set limit per pay period (as defined by the employer) that will attract overtime or penalty rates in addition to the annual salary. The intent is to avoid involuntary exploitation and to maintain a healthy work routine for staff.

Although new regulations will help ensure small businesses do business right, what matters most is employers’ self-awareness. Education is key.

Payroll tapping into AI and automation

With new clauses enforcing the practice of time tracking, businesses are encouraged to experiment with technology to improve the execution of this task. For instance, this technology can track an employee’s start and finish time each pay period, calculate ‘outer limit’ hours and work out pay shortfalls. By turning labour-intensive tasks into automated processes, there will be less human error in record-keeping.

In 2020, payroll professionals can expect to see many of the manual tasks go under the hands of intelligent software. These practices will only mature over time, allowing humans to have more strategic influence in the workplace.

Work flexibility remains questioned

Work flexibility is becoming more appealing among employees, especially Generation Z. Yet for businesses who are affected by annualised salary clauses, things are a little different.

In our recent webinar, 69 per cent of the 800+ participants indicated the new legislation will reduce workplace flexibility. Further, amidst the global Coronavirus pandemic, businesses are encouraging and, in many cases, mandating employees work from home. With “outer limit hours” in place, an employee must only work certain hours in a day, which means there is little to no flexibility in their schedule without risking increased costs to the employer. In the absence of flexible hours, if an employee is forced to both work and look after their children, productivity will undoubtedly become an issue as well.

Employers, what next?

With a proven social desire for more financial freedom and personal health, these discussions are quickly entering the wider workforce accompanied by policies that aim to meet such demands.

However, employers must also take into account the effect of annualised salary on workplace flexibility and subsequently, employee wellbeing. This means keeping pay transparent, communication consistent and reinforcing employees’ trust in the business. Employers are also encouraged to seek advice from professionals who could help dispel confusion and confirm compliance, such as The Association for Payroll Specialists (TAPS).

In 2020, these versatile disruptions will testify to employers’ resilience and tenacity, and those who invest great time and effort in adapting to change will see themselves stay well ahead of the game.